Interaction with State Programs

Laser Talk

This page was updated on 05/18/18 19:15 CDT.

Question:  How can the Carbon Fee & Dividend be reconciled with existing state programs?

Answer: There are at least three ways to reconcile the Carbon Fee with existing state programs such as the Regional Greenhouse Gas Initiative [1] or the California Cap and Trade program [2].

First, preemption, which means the state program would cease to function when the federal law takes effect; second, stacking, which means the state and federal programs would both continue independently for some period; and third, integration, where the two programs would be merged in some way that is negotiated between the state and federal governments.

As of 2017, all existing state-level carbon pricing programs in the U.S. are emissions trading systems (ETS). There are examples around the world where carbon taxes and emissions trading are both used in the same jurisdiction to complement each other. [3,4] These examples can provide guidance if necessary.

CCL strongly recommends the simplicity of a nationally uniform Carbon Fee, but the existence of prior state ETS programs need not stand in the way of passing national legislation. Our policy envisions stacking as the most suitable option.

  1. “Regional Greenhouse Gas Initiative.” RGGI, Inc.
  2. “California Cap and Trade.” Center for Climate and Energy Solutions.
  3. World Bank, Ecofys and Vivid Economics. State and Trends of Carbon Pricing 2017. Publ. World Bank, Washington, DC. (2017).
  4. “Emissions trading systems and their linking: challenges and opportunities in Asia and the Pacific.” Asian Development Bank (2016).

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